*By Patrick J. Hoban
On November 6, 2009, President Obama signed into law the Worker,
Homeownership, and Business Assistance Act of 2009, which extended
unemployment insurance benefits by 14 weeks in all states and 20 weeks
in states experiencing higher average rates of unemployment (8.5% over a
three-month period).
Then, on December 19, 2009, President Obama signed into law the
2010 Defense Department Appropriations Act (“DDAA”). The DDAA extended
COBRA subsidies created by the American Reinvestment and Recovery Act
(“ARRA”) and extended the COBRA subsidy eligibility period from December
31, 2009 to February 28, 2010 for individuals who involuntarily lost
their employment and group health insurance coverage after September 1,
2008. DDAA also expanded the period of the COBRA subsidy from 9 to 15
months and required administrators of covered group health insurance
plans to provide notice of extended COBRA benefits.
On March 2, 2010, the U.S. Senate passed H.R. 4691 which
extends the ARRA COBRA subsidy through March 31, 2010. The U.S. House
passed the bill on February 25, 2010 by unanimous voice vote but its
passage in the Senate was delayed by questions over how the Congress
would pay its $10 Billion cost. With the withdrawal of a procedural
challenge by Kentucky Senator Jim Bunning in exchange for an agreement
to vote on a separate measure to fund the bill, the Senate passed the
H.R. 4691 without amendment by a vote of 78 to 19. Once signed by the
President, the bill will become law.
In addition to extending the ARRA COBRA subsidy through March
31, 2010, H.R. 4691 clarifies entitlement to the subsidy for employees
who become eligible for COBRA due to a loss of group health coverage
resulting from a reduction in hours of work. Group plan sponsors must
notify employees whose reduction in work hours entitles them to COBRA
benefits and they will have 60 days to elect COBRA coverage. The bill
further provides that employees eligible due to a reduction in hours who
are later involuntarily terminated are entitled to a second notice of
COBRA eligibility and 60-day election period. Notably, H.R. 4691 states
that such an employee’s 15-month period of ARRA COBRA subsidy
entitlement runs from the commencement of the initial eligibility
created by the reduction in hours. Specific H.R. 4691 compliance
assistance for employers will be forthcoming from the Employee Benefits
Security Administration after it becomes law and will be available at http://www.dol.gov/ebsa/COBRA.html.
H.R. 4691 also extends unemployment benefits by an additional
13 weeks in states experiencing higher average rates of unemployment, –
the fourth such extension since the beginning of the recession in
December 2007 – continues funding to employ approximately 2,000
Department of Transportation employees, and delays a scheduled 21%
reduction in Federal Government Medicare payments to physicians.
Although the current ARRA COBRA subsidy extension will expire
on April 1, 2010, Z&R has previously that there are currently two
separate bills before Congress - S2730 and H.R. 2847 - which would
extend the subsidy through June 30, 2010.
*Patrick J. Hoban, practices in all areas of
labor and employment law, with a focus on private and public sector
labor law. If you have any questions about this legislation or other
ARRA COBRA or COBRA issues, contact Pat Hoban at pjh@zrlaw.com or 216.696.4441.
